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award mileage with credit cards

In the past I bought flight tickets with my award mileage. I even applied to credit cards when I knew that I had a large purchase to make so I can get the 30-40,000 mileage offer. As usual it takes many phone calls to get flights on the dates I want in order to book the flight with the awards.

Now I have a friend that claims that it is much better to get cards such as Capital One that give Travel rewards when one use the funds just to travel with.

I really do not know what is a better choice if one wants to travel and buy low fares. To be honest I cannot figure it out

The difference is Capital One credit cards give you "travel points" that can be used to purchase airline tickets (and other travel related items like hotels, rental cars, etc) on any airline while Airline Affinity credit cards give you "frequent flier airline miles" that can only be used on a specific airline.

Airline award seats to any given destination are limited and the demand is high so they are sometimes difficult to get, especially for the lower milage amounts like 30,000 or 40,000 miles. If you are willing to "spend" more miles to get an award ticket (say 100,000 or 150,000 miles for each ticket) you'll find those are somewhat easier to acquire.

With Capital One "travel points" you use the points to purchase tickets on any airline. The number of points you need to get a ticket depends on the actual cost for a seat on that particular flight. Each "point" is valued at $.01 so, for example, if a ticket to a certain destination costs $400 you could get that for 40,000 points. If the ticket costs $850, you'd need 85,000 "points" to get that ticket.

Using "travel points" such as those offered by Capital One gives you the most flexibility but you may need "more points" to get to the destination you desire. Using a "miles" credit card works well if you have loyalty to a specific airline. You have to choose the one that works best for you.

Regardless of the type of credit card you choose, they only make sense if you pay the balance off in full each month otherwise the interest charges on the unpaid balances could end up costing you much more than the 'free ticket is worth.

This is a complex issue and the 'which is best' question depends quite a lot on personal circumstances and preferences. Here in Canada I have an Avion card which gives 'travel points' as described by RoamsAround and also belong to Air Canada's Aeroplan and Qantas frequent flyer (we travel to Australia annually), both 'affinity' or 'loyalty programs.

I much prefer the Avion card as I can fly any date, any airline, and know in advance exactly how many points it will cost me. A round trip economy ticket to Europe, for example, will cost 65,000, with a maximum ticket price of $1,300. If the ticket cost is over $1,300 I can pay the balance out of pocket. Fees, taxes, and fuel surcharges are not considered part of the ticket price and must be plaid separately, either with $ or points. This program is best for economy travel. If you want to fly business, the points redemption process is different and not as good a deal, IMHO.

With Aeroplan, as you know from your own experience, it takes a lot of leg work and advance planning to get a seat to my destination and most of the time you have to pay a premium in points, two or even 3 times the 'minimum' points advertised in their redemption schedule. You can travel with Air Canada, or 'partner' airlines in the StarAlliance, and once again, fees, taxes and surcharges are extra. Air Canada is notorious for high surcharges, so the Aeroplan points don't go too far in covering the total cost. One advantage with the "loyalty" program is that you earn points for flying as well as for spending on your credit card. A loyalty program works best for people who fly often with one airline (or its partners) and can earn elite status, which gives them perks and greater access to award seats.

Credit cards which have an associated awards program usually charge an annual fee in addition to any interest charges you incur, so factor that into the value of what you get for 'free'.

Here in Canada we don't have a lot of competition for Air Canada, but in the US there is a lot more choice of airlines, credit cards and various types of programs so it is indeed difficult to sort out. You could take a look at flyertalk.com. There you will meet the real experts in how to work the various systems to your advantage, and there is even a thread in which you can describe your travelling and spending patterns and get suggestions regarding which program is best for you. I consider the members there the extreme couponers of the flying world: they know all the angles and I think must spend a lot of time online sitting in airport lounges working out the best deals.

I prefer cash-in-hand rewards to wrestling with airline or Aeroplan points schemes. Here in Canada I use a credit card from the largest grocery store chain which instantly gives me free groceries. It's a lot easier to find cabbages on a shelf than to search for flights with seats still available. Financially, the sooner you get the refund, the better.
I assume some US credit cards would operate similar rewards (it also seems logical that US banks would convert to chip-and-PIN, but clearly that's wrong.)